Sainsbury’s secures bid extension as Home Retail shares soar by 13%

Shares in Home Retail surged 13%, or 19.9p, to 173.5p yesterday

(Rex)

Sainsbury’s has been given extra time to raise its offer for Home Retail Group after the South African furniture seller Steinhoff trumped its bid for the Argos owner on Friday with a £2.1bn approach.

Shares in Home Retail surged 13 per cent, or 19.9p, to 173.5p yesterday, leaving it the top riser on the FTSE 250, as traders got their first opportunity to react to Friday night’s news. This is just below the 175p value of the approach from Steinhoff, which is backed by the South African billionaire and New Look owner Christo Wiese.

The City’s Takeover Panel has extended its deadline for the grocery giant to table a firm offer or walk away from a deal with Home Retail for at least six months until 18 March. This is also the date when Steinhoff has to decide whether to “put up or shut up”. Sainsbury’s had previously been set a deadline of 5pm today to make a bid.

Steinhoff’s 175p cash bid trumps Sainsbury’s cash and paper offer, which was worth 164.8p last night after shares in Sainsbury’s fell 2 per cent to 255.2p.

Both suitors have promised to return to shareholders the £200m Home Retail will receive from selling its DIY chain Homebase to the Australian retail giant Wesfarmers.

Steinhoff’s Frankfurt-listed shares rose by 1.8 per cent to €4.73 yesterday.

The company was in the spotlight for another reason yesterday when it emerged that its offices in the German city of Westerstede were raided by German prosecutors in December as part of an investigation into its tax affairs.

Christo Wiese, the South African billionaire behind the New Look fashion chain in the UK, is the biggest shareholder in Steinhoff with 17 per cent. Steinhoff also owns the Bensons for Beds and Harveys Furniture chains in the UK, as well as Conforama in Europe.

Home Retail shareholders including Old Mutual Global Investors have previously declared support for the Sainsbury’s offer, but were tight-lipped yesterday.